Publications

2013 Retail Banking Brand Vulnerability Study

Brand Vulnerability Overview

What is Brand Vulnerability?

Brand Vulnerability is a measure of a brand’s level of risk for increased customer attrition, decreased acquisition
effectiveness, and the associated financial loss based on an analysis of the frequency, impact, and uniqueness of the
frustrations their current customers experience.

How does understanding Brand Vulnerability drive value?

Brand Vulnerability is a very powerful tool for businesses looking for actionable brand / marketing insights into their brand’s current risks and competitors key vulnerabilities. It is uniquely valuable in that it:

Identifies immediate competitive vulnerabilities on which a brand / business can capitalize, particularly
as a challenger brand

Enables quantification of the impact of the vulnerabilities in financial terms, articulating what the business
risk will be if these vulnerabilities are not addressed

Ultimately, understanding Brand Vulnerability enables brands to mitigate competitive risk and the likelihood
of customer attrition immediately and efficiently by helping to prioritize resources to address their specific
areas of vulnerabilities.

Retail Baking Study Methodology

The 2013 Retail Banking Brand Vulnerability Study compares the Top 10 Retail Banks in the US based on a survey
of 3,662 real, primary customers. The study measures the frustrations of existing primary customers of
Top 10 US Retail Banks, and quantifies their potential impact in financial terms.

Retail banking brands Analyzed

Overview of Key Findings

Based on the results of the Brand Vulnerability Study, the top 10 US retail banks are projected to lose a combined
$92 billion in deposits and $5 billion in revenues over the next 12 months if existing customer frustrations are
not addressed. Of the top 10 US retail banks, the Big Four (Wells Fargo, Bank of America, Chase and Citibank)
have the most deposits and revenues at risk over the next 12 months.

Retail Banking IndustryCustomer Vulnerability Analysis (CVA):

How many customers are at risk?

Twenty-six percent of the combined customer base of the top 10 US retail banks is considered “vulnerable” or at-risk
(i.e., considered switching their primary banking relationship to another institution in the past 12 months), and 15% is
actively considering moving their primary banking relationship given a good alternative – a group we term Vulnerable Active Customers. This represents an improvement from 2011 when 33% of the customer base was considered “vulnerable”,
of which a full 20% was actively considering switching their primary banking relationship.
Unfortunately, it is unlikely that this shift is the result of a real improvement in customer experience. A more likely
explanation is that this is simply a manifestation of the “cooling down” of the backlash against big banks over recent years. In fact, the sense of resignation on the part of customers (that they have no choice but to put up with the frustrations
they have) is evident in the fact that—despite some improvements on “lower order” frustrations such as basic customer
service—the most salient frustrations around fees and charges have remained the same across the category in the
2011 to 2013 period.

The top 3 most vulnerable US retails banksby Brand Vulnerability Score

Citibank, BB&T and Bank of America, were at the highest risk for customer defection and financial loss in the short term.

At the opposite end of the spectrum, TD Bank, US Bank and PNC are the least vulnerable of the top 10 US retail banks
and stand to lose the fewest customers (as a percentage of their current customer base).

Comparison of Brand vulnerability Scores (BVS):

Top 10 Retail Banks, 2013 vs. 2011

Another noteworthy finding is that the top 3 most vulnerable banks by Brand Vulnerability Score are somewhat different between 2011 and 2013, although there is some overlap: in 2011, the top 3 most vulnerable brands were Bank of America, Citibank, and Wells Fargo, while in 2013 Citibank is the worst performer, followed by BB&T and Bank of America. The least vulnerable banks also shift a bit: in 2011, PNC, SunTrust, and US Bank round out the best performers,
while TD Bank, US Bank, and PNC are the least vulnerable this time.